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The heated discussion between utilities that maintain the wires and rooftop solar users that have “detached” from the grid is sweeping the nation. But a cooling period may be in the offing now that the two sides have agreed that utility services aren’t free and that those costs must be “fairly” shared.

Both the Electric Institute and the Natural Resources Defense Council realize that if the grid is not modernized and expanded then it would jeopardize economic growth and renewable energy expansion. That’s why they have issued a position paper that says distributed generation owners -- erstwhile rooftop solar customers -- must pay their utilities a reasonable rate for the services that they use. Likewise, homeowners must get a fair price for the electric services they sell back to their utilities.

“The electric power industry’s mission is to provide safe, reliable, affordable, and increasingly clean electricity. Today utilities are partnering with customers, regulators and all stakeholders to transform the way they generate and deliver electricity. This agreement helps chart a path to success,” says David Owens, executive vice president for the institute that represents investor-owned utilities.

With the demand for energy expected to rise in the coming years, the grid would have to grow along with it. But if increasing numbers of people “unplug” from their local utilities, then the cost of that expansion would fall on a fewer number of customers. That would harm electric reliability and it would certainly hurt those wind and solar developers that use the transmission network.

But it’s not so simple: Distributed solar customers still use the wires -- either to get electricity on cloudy days or to send their excess power to utilities, which can then avoid buying it on expensive spot markets.

The two sides have been battling over cost allocation. Rooftop solar customers want to pay as little as possible to remain minimally connected to the grid while they want to receive the full retail rate for the power that they sell back to utilities. Utilities, meanwhile, want more money from homeowners to maintain the networks and they only want to pay homeowners the wholesale cost of the power they send back to them through those same wires.

The battle is ongoing in California and Arizona while it is peaking now in Colorado. It then heads to such states as Texas, Louisiana and Vermont.

“Installations are up 34 percent in Colorado in 2013,” says Mark Stutz, spokesman for in Colorado. "If you look at the rooftop benefits, it does offset some of our generation. But it does not cover the full distribution and transmission costs, which our customers pay for.”

State utility commissions understand implicitly the issue and what is at stake. That’s why the Edison Electric Institute's and the Natural Resources Defense Council's proposal is crucial here. Much of the substance of their joint statement concerns the “decoupling” of retail sales from a utility’s financial performance. Instead, the relationship should focus on meeting customers’ energy service needs.

The idea is to separate utility rates from their sales volume. That allows utilities to promote energy efficiency while still recouping their allowable expenses. Under traditional regulatory structures, utility earnings are tied to the volume of electricity and natural gas that customers use. So, even a small reduction in consumption can make a large cut into a utility's profitability. This presents a strong financial disincentive for those companies to push energy efficiency.

Several electric and natural gas utilities are working with their state commissioners to reform the way their rates are set up. The key to success, supporters say, is for regulators to authorize the recovery of fixed costs regardless of sales.

The more energy-saving projects that are executed, the greater impact it will have on demand. Reduced consumption, in turn, should lessen the need to construct an ever-expanding infrastructure. The savings could be passed through to both customers and shareholders.

“This path-breaking agreement steers us toward new and innovative ways to increase and speed the deployment of clean energy resources,” says Ralph Cavanagh, co-director of NRDC’s energy program. "NRDC has long advocated for the increased integration of energy efficiency and renewable energy into the nation’s electric grid.”

Grid expansion and onsite generation are inherently in conflict. But the reality is that both technologies are vital to the national economic and environmental aspirations. The Edison Electric Institute and the Natural Resources Defense Council understand this. Now it is a function of a getting others to recognize the importance of both ideas, especially rooftop solar users.